Roth Conversions and CRNAs: A Timely Opportunity

If you haven’t already heard me say it, I believe that Roth IRAs are the best place for a CRNA’s retirement nest egg. And the good news is that this year’s market decline has just put them on sale for CRNAs considering Roth conversions.

What I mean by that is that the decline in the stock market means that the account values for traditional pre-tax accounts like IRAs and 401(k)s and 403(b)s will be lower in most cases. In other words, when the value of assets like stocks and funds fall, the taxes on conversions to Roth IRAs often drop as well.

In addition, there’s a greater potential for future asset growth and tax-free withdrawals—and that the stock market will rebound at some point. Consequently, CRNAs will be doing the Roth conversion at a bargain rate.

Contents hide

1 Roth Conversions & CRNAs

2 Episode Highlights

3 Links Relevant to this Episode

3.1 Never miss a new episode! Subscribe wherever you listen to podcasts.

Roth Conversions & CRNAs

For example, if a CRNA converts $25,000 when shares are at $100 each, they will convert 250 shares or 5% of their portfolio. Conversely, if a CRNA converts $25,000 when shares are at $50 each, they will convert 500 shares or 10% of their portfolio.

Now, in both situations, converting $25,000 in each, you’ll have to pay income tax on that $25,000. However, in the second scenario, converting after your account value has fallen, you’re converting a larger portion of your portfolio.

Furthermore, the whole reason a CRNA would be converting money to a Roth IRA is to be able to withdraw it tax-free in retirement. So, converting when the market is down allows the CRNA to convert a larger portion of their account for the same cost.

You’ll pay income tax on the $25,000 either way. But the big question is how much do you have to pay to get it?

In today’s episode, I’m going to delve into what’s involved with a Roth conversion, why a CRNA would want to convert to a Roth, the best time to consider a Roth conversion, and some pitfalls to be aware of.